Sec Plans To Charge 2 Firms

November 7, 2002|?????????????????

Securities and Exchange Commission investigators told Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. that they plan to ask the agency to file stock fraud and market manipulation charges against the firms.

The SEC's staff alleges the companies allotted shares in initial public offerings to investors who promised to buy more stock later at a higher price. J.P. Morgan Chase & Co. spokeswoman Kristin Lemkau, who said the company received the so-called Wells notice in recent weeks alerting it to the possibility of charges, said the bank denied any wrongdoing. Goldman spokesman Lucas Van Praag said Goldman did nothing wrong in allocating IPO shares.

Cisco stops its flow of red ink

Cisco Systems Inc., the world's largest maker of equipment to link computers, had a first-quarter profit of $618 million as revenue increased 8.9 percent, beating analyst forecasts.

Net income was 8 cents a share, compared with a net loss of $268 million, or 4 cents, in the year-earlier period, Cisco said in a statement. Sales in the quarter ended Oct. 26 rose to $4.85 billion from $4.45 billion. The estimate of analysts was for revenue of $4.81 billion.

Shares rose 28 cents, or 2.2 percent, to $12.96 in regular trading. They climbed as high 6.4 percent as $13.79 after the release of the report.

Tyco reconsiders board continuity

Tyco International Ltd.'s board may vote as soon as Friday on a plan to have two of the nine members who served under former Chairman Dennis Kozlowski stand for re-election to provide continuity.

Richard Bodman and Lord Michael Ashcroft would remain on the 11-member board partly because of their length of service at Tyco, director Wendy Lane said. That would differ from an 8-3 vote in September not to support any of the nine for re-election.

Dole turns a profit in quarter

Dole Food Co., the world's largest fruit and vegetable producer, had a third-quarter profit of $14.7 million, helped by demand for packaged salads and rising prices in Asia.

Fourth-quarter profit will be lower than analysts forecast because of fewer cost-cutting benefits and greater competition. Net income in the quarter ended Oct. 5 was 26 cents a share, compared with a net loss of $94.8 million, or $1.70, a year earlier, Dole said. Sales rose 3.8 percent to $1.25 billion.

AMR to return airline to founder

AMR Corp.'s American Eagle agreed to sell Executive Airlines back to a Puerto Rican businessman who founded the commuter turboprop flight service in the Caribbean. Terms were not disclosed for the sale to Joaquin Bolivar, chief executive officer of the Water Club Hotel and the Excelsior Hotel.

FEC to leave fiber-optic business

Florida East Coast Industries Inc., a freight and real-estate company, will exit its fiber-optic network business, writing down the value of the assets and reducing third-quarter earnings by $146.4 million.

The Epik Communications unit has a fiber-optic network that runs along rail, utility and road corridors between Atlanta and cities throughout Florida, including Miami, Orlando and Tampa. The write-off, $4.02 a share, represents the entire book value of Epik's long-lived assets, the company said.

Adelphia sues auditing firm

Adelphia Communications Corp. sued its former auditor, Deloitte & Touche LLP, for failing to detect financial problems before five of its officers were indicted in May and the company filed for bankruptcy in June.

Deloitte "knew or should have known" that founder John Rigas, two of his sons and two others hid $2.3 billion in debt and looted the company for personal expenses, as U.S. prosecutors and regulators allege, the negligence suit claims.

Generic Lipitor on the horizon

The Food and Drug Administration said an unspecified company has filed for approval to sell a generic version of Pfizer Inc.'s Lipitor cholesterol drug, the most-prescribed medicine in the United States last year. Lipitor's sales rose 28 percent to $6.4 billion last year.

AOL Latin gets Nasdaq reprieve

Fort Lauderdale-based America Online Latin America Inc. will keep its listing on the Nasdaq Small-Capitalization Market if the Internet company can shore up its stock price and meet other requirements in January. Shares rose 28 cents, or 41 percent, to 97 cents.

WorldCom expands CEO search

WorldCom Inc.'s admission that its financial misstatements may total more than $9 billion won't hinder the company's plans to reorganize and emerge from bankruptcy, WorldCom's chief restructuring officer, Greg Rayburn, said. Rayburn was hired by WorldCom to help lead the company through its Chapter 11 filing.

Separately, WorldCom is searching outside the telecom industry to find a replacement for Chief Executive Officer John Sidgmore, who will return to being a vice chairman at WorldCom after a new CEO is in place, Rayburn said.